HIS MAJESTY SULTAN QABOOS BIN SAID

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5 ANNUAL REPORT 2017 Contents Board of Directors and Management 4 Board of Directors Report 5 Operational Hig hlights 8 Health & Safety and Environment 12 Corporate Social Responsibility 15 Description of the Project 16 Profile of the Current Preference Shareholders 19 Management Discussion and Analysis Report 20 Report of the Auditors on Corporate Governance 26 Corporate Governance Report 27 Report of Independent Consultant on the performance 37 appraisal of the Board of Directors for 2017 Report of the Auditors on Financial Statements 38 Financial Statements 43 ANNUAL REPORT

6 BOARD OF DIRECTORS AND MANAGEMENT TITLE NAME REPRESENTING Chairman Mr. Murtadha Ahmed Sultan - Vice Chairman Mr. Bander Allaf Khaled Juffali Energy & Utilities Co. Director Mr. Abdullah Mohammed Ministry of Defence Pension Fund Al-Maamari (MODPF) Director Mr. Graham Farquhar - Director Mr. Yaseen Abdullatif - Director Mr. Hamad Lal Baksh Al Balushi - Director Mr. Sami Yahya Al Dugaishi - Director Mr. Ryan Armand Zanin** - Director Mr. Fabrizio Bocciardi** - Director Mr. Zoher Karachiwala** - MANAGEMENT Chief Executive Officer Company Secretary Chief Technical Officer Chief Financial Officer Administration Manager Mr. Zoher Karachiwala Mr. Guillaume Baudet Mr. Sreenath Hebbar Mr. Mirdas Al Rawahi Mr. Salah Al Farsi* * Appointed during the year. ** Resigned during the year. 4 ANNUAL REPORT 2017

7 Dear Shareholders, BOARD OF DIRECTORS REPORT On behalf of the Board of Directors of United Power Company SAOG ( UPC or the Company ), I am glad to present you with the Twenty Third Annual Report of the Company for the year ended 31 December The Company owns the Power Generating Station of Manah under a BOOT (build, own, operate and transfer) scheme. The Power Generating Plant will be transferred to the Government in It may be recalled that the Interconnection and Transmission Facilities were transferred on 1 December All power produced is sold to Oman Power and Water Procurement Company SAOC under long term Power Purchase Agreements, with guaranteed off-take. As such, the Company is not subject to market competition or fluctuation. The Manah Power Plant has been running smoothly and efficiently. The 5 generator sets of the project showed an exceptional reliability, and the performance expected for such hightechnology machines. Safety in all aspects of operation is the top priority of the Company. The Company is actively involved in the safety activities of its Operator and participates regularly in their safety walks and safety committee meetings. It gives me a great pleasure to announce that the Manah Power Plant achieved 7,885 LTI free days, which translates to 21 years since starting of commercial operations of the plant in Not only is this a unique achievement in the energy sector in Oman, but this record stands out among few companies in the world. The Plant was also awarded the ROSPA Silver Award in recognition of its excellent safety standards. I would like to re-iterate what I said about the accounting issue in respect of IFRIC 12 in my last year s report. Our current statutory auditors, BDO had qualified their audit opinion in 2016 for non-compliance of IFRIC 12. As explained fully in the MD&A Report, the Company believed that our revenue recognition policy since inception was in compliance to the project agreements finalized in 1994 with Ministry of Electricity & Water (now novated to OPWP). The revenue billed each year had been fully received and it captured the real economic realities that were negotiated and agreed at the commencement of the project. We had consistently followed the policy which had resulted in return in line with the commitment made to the shareholders in prospectus /rights issue. Any change in our policy would have led to not honoring our commitments to our shareholders who have always reposed their trust in our Company. It is also worth pointing out in this context that the matters raised in IFRIC 12 were not new and the IFRIC was issued in order to bring clarity to discussions relating to mis-matching of costs/ revenue that had taken place over many years. The primary issue that IFRIC was seeking to clarify related to that of mismatching concept, which had always existed. From the very start of the concession, the past three different auditors had highlighted this in the emphasis of matter paragraph in their audit reports. The entire matter was consistently and fully disclosed in our financial statements since inception. The current auditors had taken a view that the audit report to have a qualification as opposed to emphasis of matter. ANNUAL REPORT

8 We therefore did not to adopt IFRIC 12 and would report our results in accordance with disclosed accounting policies adopted since the formation of the Company, as this policy correctly reflected the substance of our business. Moreover, due to the qualification, the Capital Market Authority (CMA) stopped the Company to distribute dividend and directors remuneration for the year 2016, till such time the financial statements were restated and the statutory auditors gave an un-qualified opinion on the financial statements. After the AGM held in March 2017 (where CMA did not approve the agenda item for distribution of dividend and directors remuneration), the Company received a letter from CMA on 3rd April 2017 in respect of Non-compliance with legal and Regulatory Requirements. UPC responded comprehensively that UPC was not in violation of any legal or regulatory requirements and gave sound reasoning why it believes that adoption of IFRIC 12 would not reflect the true underlying transaction as per PPA entered with the Government of Oman in This was also supported by Authority of Electricity Regulations (AER) vide their letters AER-Oman/ED/348/May 2017 and AER-Oman/486/October 2017 dated 30th May 2017 and 2nd October 2017 respectively, confirming that the un-qualified audited regulatory financial statements for the year ended 31 December 2016 based on the guidelines issued by AER, gave a true and fair view of the business model of the Company. Therefore, the Board of Directors in their meeting of 19 October 2017 unanimously agreed to adopt IFRIC 12 to remove the audit qualification and consequently allow CMA to approve the dividend payment. The audited statutory financial statements for the year 2017 being presented to you now incorporate IFRIC 12. The Company recorded in 2017, a net profit of OMR million. The detailed explanations of the variations are contained in the section Management Discussion and Analysis Report of the Annual Report. The Directors of the Company is now recommending a final ordinary dividend of OMR million, which represents %50 of the current share capital of the Company (500 Baiza per share) for the year 2016 and a final ordinary dividend of RO Million which represents %100 of the current share capital of the Company (100 Baiza per share). The current capital is OMR 2,000,000 (OMR Two million). This will be distributed to the shareholders, based on the nominal value of the share OMR 1 (OMR One) as and when the Company is liquidated as a consequence of handing over the Plant to the Government in the year Further, the Company is expected to continue distributing dividends from the audited retained earnings till the time the plant is handed over to the Government. The appraisal of the Board was conducted during the year 2017 by Keynote Services LLC, independent consultants, appointed at the AGM held on 13th March The appraisal was done for the Board as a whole and self-assessment by each individual member of the Board. The appraisal was conducted based on the criteria approved at the AGM. The policy and procedure for appraisal was approved by the Board in its meeting held on 30th July The report of the consultant was received by the Chairman of the Board. The appraisal concluded that the Board performed very satisfactory during the year and is effective in meeting its objectives. Certain improvements were recommended and action on these is being considered by the Board. 6 ANNUAL REPORT 2017

9 Due to the definitive life of the project and its purpose, it is the policy of the Company to maximize distributing its available profits to the shareholders. Past five years distribution to shareholders, are disclosed separately under Management Discussion and Analysis Report. UPC complies and maintains high standards to the Code of Corporate Governance implemented by the Capital Market Authority as described in the related attached section of this report. In this respect, the Company complies with the guidelines on dividend policy and we are committed to the objectives underlying such guidelines. Except for the retirement of the Administration Manager, Mr. Jamal Al Bloushi and promotion of Mr. Salah Al Farsi to fill the position of the Administration Manager, there has been no change in the personnel of the Company during the year. The Company is a responsible corporate citizen and supports wide range of Manah community matters with greater emphasis on education and health issues of school going children. I would like to thank all the personnel associated with the operation of our Manah Power Plant and staff of the Company for their dedication and hard work. On behalf of the Board of Directors, I would also like to take this opportunity to extend our gratitude to His Majesty Sultan Qaboos Bin Said and His Government for their continued support and encouragement to the private sector. May Allah protect them for all of us. Murtadha Ahmed Sultan Chairman of the Board ANNUAL REPORT

10 OPERATION HIGHLIGHTS Power Generation The total power exported by the plant in 2017 (Phases I and II) amounts to 1,125.2 GWh. The cumulative energy exported by the plant from initial commissioning is 23,484 GWh. The aggregate average plant guaranteed net output (PGNO) for the reporting period was 91.9 MW for Phase I, and MW for Phase II at an average ambient temperature of 29.5 C. The use factor (No. of fired hours as a percentage of the hours that the units were made available) was 6.4% for Phase I and 76.9% for Phase II. Manah recorded 99.4% Reliability of the total Plant (phase I & phase II units) with 210 hours of Forced Outages in Evolution of these figures from commercial operation date is as under: Year Available energy (GWh) Availability factor ( % ) Energy Exported (GWh) Use factor ( % ) Reliability factor ( % ) 1996 ( * ) ( **) 1, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , (*)COD Phase 1:15th October 1996 (**) COD Phase 2:19th May ANNUAL REPORT 2017

11 Maintenance and Operation methodology The PPA and its additional agreements lay down norms for operation and maintenance of the station and expect certain minimum levels of performance. However, in formulating the strategy for operation and maintenance, UPC strives to meet the highest industry standards. Gas turbines are highly reliable power generating machines, provided they are operated and maintained under certain norms. Efforts have been constantly put in to further improve reliability. During the initial years of service of the gas turbines in Manah, valuable experience has been gained and used to establish unique signature for each machine. This experience is used in evolving better operations and maintenance methodologies. For Phase I, UPC entered in November 1997 into a Spare Parts Supply & Repair Contract with EGT (now GE) the term of this contract ended on 31st December Following a competitive bidding process, UPC entered in September 2005 into a Long Term Parts and Repair Agreement (LTPRA) with GE the term of this new contract is 15 years. For Phase II, UPC entered in December 2000 into a Long Term Service Agreement (LTSA) with GE. This agreement secures the procurement of the spares needed for the whole commercial life of the 2 new Frame 9 units (20 years). In 2009, UPC changed the structure of its O&M Contracts and entered into an agreement with Suez-Tractebel Operation & Maintenance Oman (STOMO). With this agreement in place, UPC has a single point of contact for O&M services as opposed to multiple contractors in the earlier structure. STOMO now co-ordinates all the O&M activities (including the LTSA with GE) and procurement of parts through the LTPRA Contract. According to the terms of these contracts, a suitable and sufficient stock of spares is maintained in order to avoid unplanned outage of the gas turbines. The combined efforts of UPC and its contractors GE and STOMO have produced best results in terms of reliability, efficiency and best value for resources used. ANNUAL REPORT

12 Maintenance Activities Phase I Scheduled maintenance: The total maintenance time consumed for the year was 991 hours, i.e. 3.8% of total calendar hours Annual maintenance carried out on all GTs. Phase II Scheduled maintenance: The total time consumed for maintenance was 1,959.4 hours in the reporting period, i.e. 11.2% of total calendar hours during reporting period Major Inspection undertaken on GT2B in March & April Performance Tests Performance tests were conducted during December 2017 for Phase I and II in the presence of OPWP. The test results were satisfactory, all machines have higher electrical output capacity and lower heat rate values (gas consumption) when compared to the guaranteed values as per contract. Phase 1 Power Output (KW) Ph 1 Heat Rate (KJ/KWH) 10 ANNUAL REPORT 2017

13 Ph 2 Power Output (KW) Ph 2 Heat Rate (KJ/KWH) Omanization UPC and its O&M contractor STOMO pay the greatest attention to respect the requirements of the Power Purchase Agreement in matters of Omanization: at the end of the year 2017, Omani employees comprised 87.8% of the plant staff of STOMO. As can be seen from the above, the training programs put in place by STOMO since 2009 for young graduates from Oman Universities has paid rich dividends. ANNUAL REPORT

14 Health & Safety HEALTH & SAFETY AND ENVIRONMENT Health and Safety is accorded the highest priority by the Company. While the statistics show a consistent record of excellence, the Company is mindful of complacency that can set in with these results. As a consequence, steps have been taken that shall ensure a more proactive approach towards the issue of Health & Safety. Loss Time Incident (LTI) of Manah Power Plant remains ZERO during the O&M regime following COD of both phases. As of December 2017, the Plant has clocked 7,885 LTI free days since the commencement of operations. During the year, Manah Plant was awarded the ROSPA Silver Award in recognition of its stellar performance on Health & Safety. The Company Management regularly takes part in safety walks with its Operator and attends their Safety Committee Meetings. Our Customer, OPWP, as part of their commitment to HSE also conducted an audit during the year. The Plant Operator (STOMO) is certified for OHSAS for Health & Safety Management. STOMO is also been certified for ISO Environmental Management. In order to further the culture of safety through all levels, STOMO is encouraging its key personnel to qualify for NEBOSH. The on-line safety management system Intelex a dynamic system that enables reporting of incidents, assigns actions to concerned persons, monitors close follow-up of actions being taken and ensures that adequate closure is achieved is in place and is actively used by all employees. During 2017, as shown in the Safety Triangle below, we had three damages to equipment / property and one near miss. All incidents are logged onto the system and appropriate tool box talks and training provided to staff and contractors. 12 ANNUAL REPORT 2017

15 The Health & Safety Statistics For The Year Is Represented Graphically By The Safety Triangle Below: Other Proactive Indicators for Safety Monitoring: (Use scale on left hand for bar graphs) ANNUAL REPORT

16 Environment Monitoring Since 2013, UPC has a permanent station for monitoring of ambient air quality within its plant premises. The equipment continuously monitors the ambient air for gaseous effluents such as carbon monoxide, non-methane hydro-carbons, oxides of nitrogen (NO, NO2, NOx) and sulphur dioxide. Reports from this station are submitted to MECA on a quarterly basis. We believe this also helps MECA in establishing base line ground level concentrations for gaseous effluents by feeding into the larger environment data being monitored by MECA. In this way, it can be considered that the Company is one of the contributors to the mapping of Oman s environment. 14 ANNUAL REPORT 2017

17 CORPORATE SOCIAL RESPONSIBILITY In line with the directives by His Majesty Sultan Qaboos bin Said on the responsibilities of the private sector in respect of their contribution to the social development of communities; United Power Company takes its role as a responsible corporate citizen seriously. Over the years, the Company has actively supported local community bodies, schools and charity organizations. Valuing the importance of the youth of Oman in future progress of the country, the Company considers education as a cornerstone and accordingly takes special interests in the sponsorship and support of education and sports; two foundations for the all-round development of a young mind. In 2017, the Company focused its efforts on education projects, youth & sports activities, society support and municipal activities. The Company carried out the following projects during the year: Distribution of stationary items to all students of low income families: The supervision of this activity was managed by Manah Charity Team who keeps updated registers of all the needy students in all schools located in Manah. The financial support was used to purchase stationery items (writing books, pens, pencils, color pencils, drawing books, etc.) to a total 502 needy students. Sponsoring the Open Day for Al Arabi Team in Manah: The club is under the umbrella of Al Bashaier Club of Manah. Participants, totaling 450 persons from different ages, were divided into four groups to carry out, among other activities: cleaning of falajes, cemetery, pathways, mosques, neighborhoods, trees trimming and general cleaning activities in Manah. It was a full day event which concluded with sports activities and cultural competitions. Traffic Safety Campaign: The campaign was organized by Royal Oman Police for one week during the month of March It aimed to limit traffic accidents and the related losses in lives and assets and address the matter as a development hinder issue. The campaign included an exhibition where safety gears and traffic safety guidelines were displayed, plays on traffic; a mini traffic village was setup for students. The program also included visits by students to hospitals for the injured in traffic accidents. The function was part of GCCC Traffic Week. The Company also sponsored a fund raising event for a non-profit organization and provided some financial contribution to the association of Early Intervention for Children with Disability. Financial donation to the Municipality of Manah to carry some municipal and serving projects in the Wilayat, The projects which the municipality intends to make: maintenance of Falaj, maintenance of Al Majmre public park, putting light pools, creating four umbrellas (shades) in Al Majmar public park and others. ANNUAL REPORT

18 History of the Project DESCRIPTION OF THE PROJECT United Power Company (SAOG) (the Company ) was formed and registered as a joint stock Company on January 9th, The original duration of the Company was for a period of twenty-five years commencing from 9 January 1995 being the date of its registration in the Commercial Register of the Ministry of Commerce and Industry ( MOCI ). At an Extra-ordinary General Meeting held on 17 January 2000, the duration of the Company was increased by five years thereby revising the duration of the Company to thirty years commencing from 9 January The MOCI approved the extension to the Company s life on 11 October All the property, plant and equipment of the Company is to be transferred at RO 1 to the Government automatically at the end of the Project Life, which, in accordance with Supplemental Agreements for the Expansion Project, expires on 30 April (At the end of the Project Life, the value of the shares of the Company will become nil.) The founder shareholders were Tractebel S.A., International Finance Corporation (part of the World Bank Group), National Trading Company LLC, W.J. Towell & Co. LLC, The Zubair Corporation LLC, and Tawoos LLC. A brief timeline on the transfer of shares of UPC: Shares of Tawoos LLC were transferred to the Ministry of Defence Pension Fund of Oman Shares of Tractebel SA (now ENGIE) and International Finance Corporation transferred to MENA Infrastructure Investment Limited Shares of National Trading Company LLC. W.J. Towell & Co. LLC and The Zubair Corporation LLC transferred their shares to MGEC (Oman) Holdings Limited Shares of MENA Infrastructure transferred their shares to Manaah Power Co., a group company of Khaled Juffali Holding Co Shares os MGEC (Oman) Holdings Limted were transferred to Manah Power Co. a group company of Khaleed Juffali Holding Co. - Shares of Mannah Power Co were transferred to its parent company, Khalid Jaffali Energy & Utilities Company, a group company of Khaled Jaffali Holding Co Prior to formation of the Company and following a competitive bidding process, the founder share holders were awarded, the concession for a project consisting of a 90 MW gas fired power station comprising 3 open cycle gas turbines (the Units ) near Manah, to be developed on a build, own, operate and transfer ( BOOT ) basis, and a related network of electrical interconnection and transmission facilities (the ITF ), on build, own, transfer ( BOT ) basis on land leased by the Government. Construction of the Manah Power Station began in March 1995 and the Company began delivering electricity on May 31, 1996 upon completion of two Units and approximately 58 kilometers of overhead transmission lines to Nizwa and Bahla replacing the supply by the obsolete local diesel engine power plants. 16 ANNUAL REPORT 2017

19 Full supply to Dakhliya region from Manah (3rd Unit and Izki line) was achieved in early August 1996 and project completion occurred in October 1996 with the interconnection of network fed by the Manah Power Station to Muscat network at Al Rusayl. The lines owned by UPC have a total of about 170 kilometers in 132KV. Responsibility for the operation and maintenance of the ITF was transferred in stages to the Government during construction, with the final transfer occurring on October 15, During 1999, the Company was awarded a contract for an extension of its generation facilities consisting of two 90 MW open cycle gas turbines and the necessary auxiliary facilities (GIS, firefighting system, liquid fuel storage, etc.). The construction and installation of the turbines were completed in May 2000, and thereafter the electricity was delivered to the grid. The official commercial operation was notified as 19 May The total installed capacity of the plant, therefore, reached 270 MW. Consequent to the extension of the facilities, the life of the project has been extended to 30 April The Manah Power Station operates on Dispatch Orders from the Load Dispatch Centre of the Oman Electricity Transmission Company. All of the net energy dispatched from the Manah Power Station is sold to Oman Power and Water Procurement Company ( OPWP ), which is responsible for all power purchase in Oman. UPC maintains an administrative office in Muscat. The Project constitutes the first privately developed and owned power plant in Sultanate of Oman and the first interconnection of privately constructed transmission facilities with the country s national grid. Brief Technical Description Of The Project Manah Power Station The Manah Power Station is located on 200 acres of land, approximately 180 kilometers South- West of Muscat, and 20 kilometers south of Nizwa at an elevation of 378 meters above sea level. Phase I Power generation facilities Originally, the Manah Power Station consisted of three open cycle dual fuel Gas Turbine Units, each having a capacity of approximately 28,076 kw at 50º C, complete with 11/132 kv step-up transformers, a GIS sub-station interconnecting the Manah Power Station with the two 132 kv overhead line feeders to the Nizwa substation, natural gas pipeline facilities, back-up diesel oil facilities, water storage tanks, a control and administration building, a work shop and storage facilities for spare parts, staff housing and access roads. Phase II Power generation facilities The Manah Power Station Phase II consists of two GE Frame 9E dual fuel Gas Turbines, with 15/132 kv step-up transformers, two GIS identical to the existing ones. These cells are connected with the two existing 132 kv circuits, each of them being originally sized to carry the whole expanded capacity of the Manah Power Station. The Phase II includes extension of auxiliary facilities: firefighting system, lightning protection system and additional 4000 m 3 back-up diesel oil storage. The nominal capacity of each gas turbine is 92,160 kw (at 50º C). ANNUAL REPORT

20 Interconnection and Transmission Facilities The ITF includes the following substations: 132 kv GIS substation at Manah; 132 kv outdoor substation at Nizwa; 132 kv outdoor substation at Izki; 132/33 kv substation at Bahla; 33/11 kv substation at Nizwa town; and 132 kv GIS substation extension at the Al-Rusayl Power Station. In addition, the ITF includes approximately kilometers of 132 kv double circuit (i.e. two circuits on one tower) overhead transmission lines, constructed with steel lattice towers running between the Manah and Nizwa substations (18.8 km; 63 towers), between the Nizwa and Bahla sub stations (32.2 km; 92 towers), between the Nizwa and Izki substations (30.7 km; 94 towers) and over very mountainous terrain, between the Izki and Al-Rusayl substations (87 km; 287 towers). The ITF includes one 33 kv double circuit overhead transmission line comprised of two single circuits (i.e. two parallel single lines on wooden poles) between Nizwa and Nizwa Town substations (7.25 km, 140 wood poles) and one 11 kv overhead distribution network comprising three single circuit 11 kv wood pole lines between the Izki substation and the Izki power station (2 km). These lines and the related switching facilities of the ITF enable the power generated at the Manah Power Station to supply the local electricity demands in the town of Manah, Nizwa, Bahla and Izki. Excess electrical power can also be transmitted to the Muscat grid to help support the demand in the coastal region of Oman through an interconnection at the Al-Rusayl power station. Effective 1st December 2016, the Interconnection and Transmission Facilities were handed over to government in accordance with the conditions of the PPA. Fuel Supply The Manah Power Station has been designed to use natural gas as its primary fuel with diesel oil as a back-up fuel. Natural gas is supplied to the power station through a 36-inch pipeline delivering gas at 70 Bar from the Yibal gas collecting station, which is located 198 kilometers from the Manah Power Station, to a pressure reducing station, including metering equipment, located outside the northeast corner of the Site. The pipeline is owned and controlled by PDO. Environmental Aspect The Manah Power Station represents an environmentally benign source of power for the local market and although the gas fired has small traces of sulphur, impact on air quality are monitored on a monthly basis by UPC using the Ambient Air Quality Monitoring System at the Plant. 18 ANNUAL REPORT 2017

21 PROFILE OF THE CURRENT PREFERENCE SHAREHOLDERS Khaled Juffali Energy & Utilities Co Khaled Juffali Energy & Utilities Co, a subsidiary of Khaled Juffali Holding Company ( Khaled Juffali Group ) established in the Kingdom of Saudi Arabia. Khaled Juffali Group ( KJC ) is having an underlying focus on investing in Middle East based business ventures. KJC is involved in various industries that include automotive,, insurance, healthcare, construction and energy. Ministry of Defence Pension Fund ( MODPF ) The Ministry of Defence Pension Fund is a public legal entity in the Sultanate of Oman duly organized under, and registered pursuant to, Sultani Decree 87/93 issued on 29th December The Ministry of Defence Pension Fund is one of the largest pension funds in Oman and is a major investor in the local capital markets, both in equities and bonds. It is also a major participant in project investments and Real Estate investments. The fund is represented on the boards of several prominent Corporate in Oman. ANNUAL REPORT

22 MANAGEMENT DISCUSSION AND ANALYSIS REPORT A. Industry Structure and Development The Company is the first privately owned power project in the country. The Government regulates the development of this sector under a well-formulated program on long-term basis. The new sector law is in existence. B. Opportunities and Threats The Company was formed specifically to build, own, operate and (at the end of the Term of the PPA) transfer the Plant located at Manah. The related distribution network of overhead transmission lines and substations, which was built and owned by UPC was transferred to the relevant stakeholders (OETC and Mazoon Electricity Co., facilitated by OPWP) in December 2016.,The Company cannot undertake new ventures. Long term Power Purchase Agreements with Government protects the Company from market forces. In terms of Energy delivered to the grid, the following trend has been observed: 20 ANNUAL REPORT 2017 As can be noted, there is a decreasing trend in the dispatch of Phase 1. This is expected to continue to be dispatched at low levels. Phase 2 shows a slight increasing trend in energy delivered, making up for the lost amounts in Phase 1. However, this may not continue after the commissioning of the new Power Plant being built at Ibri. Since UPC s revenues are mainly driven by Plant Availability, revenues from Energy delivered would not have a significant impact on profitability. However, non-operation of the Plant would result in some power being imported to keep essential systems in operation. This would lead to some additional expense. C. Qualification of audit opinion in the financial statements of Our current statutory auditors, BDO had qualified their audit opinion for noncompliance with IFRIC It is worth pointing out in this context that the matters raised in IFRIC 12 were not new and the said IFRIC was issued in order to bring clarity to discussions relating to mis-matching of costs/ revenue that had taken place over many years. The primary issue that IFRIC was seeking to clarify related to that mis-matching concept, which had always existed. Since the formation of the Company, three different auditors had given emphasis of matter paragraphs in their reports relating to this issue, and the financial statements have fully disclosed this matter in details, so that the user of the financial statements have complete information.

23 3. Some background to the matter follows: 4. IFRIC 12 was issued in November 2006 to be effective for financial statements commencing on or after 1 January The essential components of IFRIC 12 are that under a BOOT agreement: (a) (b) the property, plant, and equipment of a concessionaire should not be considered as an own asset; and the concessionaire should recognize as a financial asset the value which it has gained by nature of the definite amounts receivable under the BOOT agreement or as an intangible asset the value of amounts that are potentially receivable. On recognizing the financial asset at inception, an amount of deferred revenue would therefore be created. 5. Under IFRIC 12, the amount of revenue recognized each year would be a combination of: (a) (b) a release from the deferred income account in a manner consistent with services provided; and the unwinding of the receivable discounting. 6. The release each year from the deferred income account would not be an equal amount each year over the period of the concession, but would mirror the services provided in that year. Under concession agreements generally, and specifically for UPC the services provided include: Construction of the plant Operating costs Arranging funding Interest costs 7. Since the BOOT billing arrangement was structured by the parties to allow for dividends or capital reductions to be paid to the shareholders and repayments made to the banks in a contractually agreed manner, the application of IFRIC 12 would have had an impact on the arrangement agreed between the different parties. It is highly unlikely that the then MEW and the Government (seeking at the time to attract foreign investment in the power section) would have endorsed adopting new accounting rules that would have penalized the investors that they had committed to under arrangements that were structured on previously applicable accounting practice. 8. It was primarily for this reason that the management had considered it inappropriate to apply IFRIC 12. The issue being that the terms of the concession agreement was based on the accounting rules that applied at the time of the agreement i.e. June 1994, and it would not now be possible to re-negotiate terms with the investors and bankers, merely because accounting rules had changed, and may likely change again. 9. In the view of management, as agreed to by most of three previous auditors, to apply the new accounting rules would have given rise to financial statements that unfairly represented the commercial reality of the establishment of the Company. ANNUAL REPORT

24 22 ANNUAL REPORT Moreover, up to the introduction of IFRIC 12, the revenue recognized by UPC had been in accordance with the rates agreed in the concession agreement. Those rates had been structured in such a way so that the annual billings would cover both expenses that would be incurred or charged in the income statements and also to cover bank loan repayments and dividends and capital reductions to investors. 11. Since all the above components of services were built into the billing rates, it follows that revenue under IFRIC 12 would to a large extent be consistent with the revenue based on the billing rates, although there would be a certain level of mis-matching, which had anyway been the case since the inception of the concession. Again it is necessary to understand that the annual release from deferred revenue would not be an equal amount such year, but would reflect the different components of services provided (in the same way that the annual billing mirrored the services provided). 12. Further if, we look at 20 years of operations, the billings raised to our client have been fully realized and the net profit is more or less consistent. We have achieved the return profile to shareholders in line with the commitments made in the prospectus. Had we followed IFRIC 12, the return profile would be different and we may not have been able to honor our commitments. 13. The Company had entered into agreements with the shareholders and MEW (and others) that were based on the accounting rules and practices accepted at that time and it was those agreements that constituted the substance of the arrangements and was formalized in the Power Purchase Agreement (PPA). The continuation of the Company is totally dependent of the adherence to the PPA. If we violate the PPA then we have don t have a company to operate. It continues to be the view of the management that the financial statements must reflect the true nature of the business of the Company. D. Effects of Audit Qualification The Capital Market Authority (CMA) stopped the Company to distribute dividend and directors remuneration for the year 2016, till such time the financial statements were restated and the statutory auditors gave an un-qualified opinion on the financial statements. E. Summary of steps in 2017 to resolve the matter After the AGM held in March 2017 (where CMA did not approve the agenda item for distribution of dividend and directors remuneration), the Company received a letter from CMA referenced CMA/73/2017 dated 3rd April 2017 in respect of Non-compliance with legal and Regulatory Requirements. UPC responded comprehensively through letter No. UPC/BDO/10386/17 dated 9th April 2017 that UPC is not in violation of any legal or regulatory requirements and gave sound reasoning why it believes that adoption of IFRIC 12 would not reflect the true underlying transaction as per PPA entered with the Government of Oman in This was also supported by AER s letters AER-Oman/ED/348/May 2017 and AER-Oman/486/October 2017 dated 30th May 2017 and 2nd October 2017 respectively, confirming that the un-qualified audited regulatory financial statements for the year ended 31 December 2016 based on the guidelines issued by AER, gave a true and fair view of the business model of the Company. However, the CMA insisted on audited financial Statement complying with IFRIC 12, while AER have a different view. Therefore, the Board of Directors in their meeting of 19 October 2017 unanimously agreed to adopt IFRIC 12 to remove the audit qualification and consequently allow CMA to approve the dividend payment. The audited statutory financial statements for the year 2017 now incorporate IFRIC 12.

25 F. Analysis of Results The net profit for the year under review was lower by OMR 841k as compared to previous year.this was mainly on account of a number of factors, explained in the following paragraphs. Revenue OMR 000 Power tariff reduction (717) [The power tariff has been structured in such a way that tariff rates are higher during the initial years as compared to later period of the project tlife]. Lower energy and indexation revenue, etc. (84) Lower additional starts (60) Deduction in Variable Capacity tariff re. ITF insurance (369) Variable capacity tariff Indexation (50) Winter maintenance allowance exceeded (100) Lower failure to start deductions 29 Lower Financial income (360) Increase in revenue due to Phase 1 reduction in (791) Expenses 1. Operation & administration expenses increased by OMR 214K. The net increase was on accou of the following: Negative Variances Higher capital spares costs (207) Management fee indexation (13) Miscellaneous (19) Higher R&M cost-plant (333) Positive Variances Lower insurance on account of ITF 146 No ITF tower repair costs in Lower O&M fees on account of lower additional starts 45 Decrease in O&M fees due to lower production 7 Lower Tax rate claim 17 Lower R&M costs- custom duty 46 Lower remuneration Decrease in depreciation 0 3. Decrease in Finance costs Taxation due to lower profit and deferred tax credit (including tax rate increase) 64 (50) ANNUAL REPORT

26 G. Analysis of Balance Sheet The significant variations in balance sheet section can be explained as follows: OMR 000 Decrease in financial asset due to cash collection (2,940) Decrease in Trade Receivable/other receivables (92) Bank balances and cash 2,554 Increase in Deferred tax asset 4 Short term borrowing Effective of cumulative repayment of facility 500 Provision for tax (418) Retained earnings (mainly profit for 2017) 391 H. Financial Highlights The Company s performance for the past five years; Years 2013 & 2014 are based on financial statements before restatement OMR 000 OMR 000 OMR 000 OMR 000 OMR 000 Net Profit 391 1,232 2,322 1, Total Assets 12,086 12,559 16,482 15,892 18,514 Total Revenue 4,172 4,603 5,381 10,376 11,399 Total Shareholders Fund 10,506 10,115 9,938 8,344 10,759 Paid up Capital (Original) 34,869 34,869 34,869 34,869 34,869 Capital reduction-accumulated to date 32,869 32,869 32,869 29,869 27,895 Current Paid up Capital 2,000 2,000 2,000 5,000 6,974 Weighted average number of Shares 2,000 2,000 2,000 6,810 8, (opening) Return on total assets 3.24% 9.81% 14.09% 6.4% 4.1% Return on Current paid up Capital 19.55% 61.60% % 20.4% 10.9% Long Term Debt: Capital ratio 0:100 0:100 0:100 0:100 0:100 Ordinary Dividend (Interim) * % - - Ordinary Dividend (Final) ** 100% 50% 50% 30% 20% Book value per share on weighted average shares - OMR Reduction of original paid up capital during the year % 5.66% 5% *Based on paid up capital at the time of distribution. ** Based on paid up capital at 31 December. The above trend should also be seen in the light of the fact that the value of the Company s shares shall become nil at the end of the project life. 24 ANNUAL REPORT 2017

27 I. Outlook for 2018 Due to nature of its activities and the fixed contractual framework within which the Company operates we foresee no major change in the Company s activities. OPWP has modified its power procurement strategy and has delayed its new plant procurement based on a number of factors; including a re-assessment of demand growth that has been affected by the general downturn in the market and some re-adjustments in demand following the implementation of Cost Reflective Tariffs. Besides, with the expiry of the first stage of P(W)PAs, OPWP is exploring the possibility of their extension which would further delay the ordering of a new Plant. The Company is eagerly awaiting the outcome of the above exercise, which among other things could determine the continuity of operations beyond the initial term stated in the Power Purchase Agreement. The Company is committed to explore all possibilities to enhance shareholders returns and will seek shareholders approval if and when any such opportunities arise. J. Internal Control System and their adequacy The Company believes in strong internal control systems as a tool to contribute high performance in operation and management of the Company. As required under CMA regulations an internal auditor was appointed in 2010 and is actively engaged to renew the processes and transactions. United Power Company has implemented a critical review of all unique processes of the Company, and that the appropriate control and segregation of duties has been applied. Furthermore, the internal auditor also reviews Company s compliance with applicable laws and CMA regulations. K. Transfers to Investors Trust Fund No unclaimed amounts was transferred by Muscat Clearing & Depository Company SAOC to Investors Trust Fund during 2017, as no dividend was declared and paid due to the decision of the CMA not to allow the approval of the dividend in the AGM held in March ANNUAL REPORT

28 26 ANNUAL REPORT 2017

29 CORPORATE GOVERNANCE REPORT Philosophy on code of Corporate Governance A new Code of Corporate Governance circular E/4/2015 dated 22 July 2015 for Public Listed companies was issued which was applicable from 22 July The Company believes that Code of Governance is an effective tool to improve operational and financial performance of listed companies. Code of Governance ensures accountability, which leads to transparency and ensuring impartial treatment to all investors. This ultimately increases the confidence of shareholders and prospective investor in the results. We confirm to comply and maintain high standards of the Code and enhance our image as a good corporate citizen. In compliance with the Article 26 of Circular No. 11/2002, the Company is including this separate chapter on Code of Governance in its annual financial statements for the year ended 31 December Board of Directors (a) Composition of the Board of Directors, Category of Directors, and their attendance record and number of Board meetings held during the year. Name of Directors ABR Board Meetings held and attended during the year FEB 27 MAR 28 MAR 27 APR 30 JUL 19 OCT TOTAL Mr. Murtadha A. Sultan (Chairman) NEI Mr. Bander Allaf (Vice Chairman) NENNI Mr. Abdullah Mohammed Al-Mamari NENNI Mr. Grahame Farquhar NEI 1 1 Proxy Mr. Yaseen Abdullatif NEI Mr. Hamad Lal Baksh Al Balushi NEI Mr. Sami Yahya Al Daghaishi NEI Proxy Mr. Ryan Armand Zanin* NEI Mr. Fabrizio Bocciardi* NEI Proxy Mr. Zoher Karachiwala** ENI * Resigned during the year ** Term completed. NENNI Non-Executive Nominee & Non-Independent NEI Non-Executive & Independent ENI Executive & Non Independent AGM (b) Directorship / membership of the Company s directors in other SAOG companies in Oman held during the year. Name of Directors Position held Name of the Company Mr. Murtadha A. Sultan Chairman Gulf International Chemicals Mr. Bander Allaf None - Mr. Abdullah Mohammed Al-Mamari None - Mr. Graham Farquhar None - Mr. Yaseen Abdullatif Director & Chairman Audit committee.sahara Hospitality Co Mr. Hamad Lal Baksh Al Balushi None - Mr. Sami Yahya Al Daghaishi Director Ubar Hotels and Resorts The profile of directors and management team is included as an Annexure to the Corporate Governance Report. ANNUAL REPORT

30 AUDIT COMMITTEE (a) Brief description of terms of reference. The primary function of the Audit Committee is to assist the Board of Directors in fulfilling its oversight responsibilities by reviewing the financial reports and other financial information provided by the Company to any governmental body or the public; the Company s systems of internal controls regarding finance, accounting, legal compliance and ethics that management and the Board have established; and the Company s auditing, accounting and financial reporting processes generally. Consistent with this function, the Audit Committee encourages continuous improvement of, and fosters adherence to, the Company s policies, procedures and practices at all levels. The Audit Committee s primary duties and responsibilities are to: Serve as an independent and objective party to monitor the Company s financial reporting process and internal control system; Review and appraise the audit efforts of the Company s statutory and internal auditors; Provide an open avenue of communication among the statutory and internal auditors, financial and senior management and the Board of Directors. Validate and verify the overall efficiency of the executive management in implementing the operational directives and guidelines set up by the board. Evaluate and monitor the adequacy of internal control systems and their efficiency. Create policies for safeguarding the Company s human, material and intellectual resources and assets. (b) Composition of Audit Committee and attendance record of Committee Members. Name of Committee Members Position Meetings held and attended during 2017 FEB 09 APR 27 JUL 30 OCT 19 TOTAL Mr. Yaseen Abdullatif Chairman Mr. Grahame Farquhar Member Mr. Sami Yahya Al Daghaishi* Member Mr. Ryan Zanin ** Member * Appointed in the Board of the Director meeting held on October 2017 ** Resigned during the year (c) Sitting fee of RO 200 per meeting is paid to the attendee members. Activities during the year are as follows: The Audit Committee has reviewed, on behalf of the Board, the effectiveness of internal controls by meeting the internal auditor of the Company, reviewed the internal audit reports and the recommendations, met the external auditor, and reviewed the audit findings. (d) In 2017, the Board of Directors, through the Audit Committee, reviewed and assessed the Company s system of internal controls based on the audit report submitted by the Auditors. The Board also reviewed the operational reports generated by the Management of the Company, which compares the budget and the actual. The Audit Committee and the Board are pleased to inform the shareholders that, in their opinion, an adequate and effective system of internal control is in place. 28 ANNUAL REPORT 2017

31 Nomination And Remuneration Committee a) Brief description of terms of reference The primary function of the NRC is to assist the Board of Directors in fulfilling its responsibilities set out in the Code of Corporate Governance Circular E/4/2015 issued in July The above is summarized as follows: Determining the required skills for smooth functioning of the Board and the Company s executive management, its continuous development and selecting appropriate person to recommend and fill the seat in the Board. Assist the Board in determining Directors remuneration and sitting fee. Develop succession plan for the executive management and develop remuneration package including performance based incentive plan. Investigate ethics, regulatory & compliance matters Assist the Board in setting up criteria in respect of evaluation of the Board and its directors, incluing appointment of the independent consultants and advisors to carry out the evaluation. b) Composition of NRC and attendance record of Committee members Name of Committee Members Position Meeting held and attended during the year 2017 MAR 27 JUL 16 Total Mr. Bander Allaf Chairman Mr. Abdullah Mohammed Al-Mamari Member *Mr. Fabrizio Bocciardi Member 1-1 * Resigned during the year. c) Sitting fee of OMR 200 per meeting is paid to the attendee members d) Activities during the year The NRC met twice during the year to recommend appointment of independent evaluator to carrout evaluation of the Board and its directors, develop the remuneration package of the Chief Executive Officer and reviewed nomination forms for the election of the new Board of Directors. Process Of Nomination Of Directors The election of the Board is governed by the Company s Articles of Association (Article 24 to 27). The current Board of Directors was elected on 19 March 2017 for the term of three years ending March Further, as required by CMA circulars, the Company obtained Nomination Form from all directors. The forms were verified to its compliance and authenticity by the Company s Secretary, Legal Counsel and the NRC, before being sent to the CMA. ANNUAL REPORT

32 Remuneration (a) Directors Remuneration and Attendance Fee. Sl. No. In accordance with the Articles of Association, the Company was entitled to pay directors remuneration equivalent to 10% of calculated net profit. However, due to CMA s administrative decision 11/2005, the Directors remuneration including sitting fees are restricted to 5% and is also subject to limits prescribed. The remuneration to be approved by the shareholders in the up -coming AGM is set out below: OMR Director s remuneration Sitting fee (excluding fees to Audit Committee and NRC members) - 16,000 Total 16,000 The Board sitting fees paid to individual directors for meetings of the Board attended during the year are given below. The Company does not pay sitting fees for participation in Board sub-committees meetings, except for the Audit Committee and NRC meetings. The Directors remuneration is paid pro-rata for each Directors participation in the Board meetings. Attendance at Board meetings, Audit Committee and NRC meetings by video or teleconference is deemed to be attendance in person; attendance by proxy is not considered attendance for purposes of remuneration. Name of Director For the year 2018, the Company will pay sitting fee per Director up to a maximum of RO 10,000 per year, subject to an overall cap of aggregate fee amounting to RO 50,000. (b) Top Five Officers No. of meetings attended for sitting fee Total sitting fees paid in OMR Total Remuneration in OMR 1 Mr. Murtadha Ahmed Sultan 6 2,400-2 Mr. Bander Allaf 6 2,400-3 Mr. Abdullah Mohammed Al Mamari 6 2,400-4 Mr. Graham Farquhar 5 2,000-5 Mr. Yaseen Abdullatif 6 2,400-6 Mr. Hamad Lal Baksh Al Balushi 3 1,200-7 Mr. Sami Yahya Al Daghaishi 4 1,600-8 Mr. Ryan Zanin Mr. Fabrizio Bocciardi Mr. Zoher Karachiwala TOTAL 16,000 - The aggregate remuneration charged by Power Development Company under the Amended and Restated Management Company Agreement for the top five officers of the Company was RO 276,346. Non-Compliance Penalties or Non-Compliance of Corporate Governance and Reason No penalties or strictures were imposed on the Company by Muscat Securities Market / Capital Market Authority or any other statutory authority on any matter related to Capital Market during the last three years. There were no other instances of non-compliance with corporate governance. 30 ANNUAL REPORT 2017

33 Means of Communication with the Shareholder and Investors Annual accounts and quarterly accounts are put on official website of MSM in accordance with the guidelines by the market regulators. Notice to the Annual General Meetings is sent by post to the registered shareholders. The Company has launched its own web-site The Chairman gives press releases in case of important news and development that arises. Such press releases are posted to the web-site of MSM in accordance with the guidelines issued by the market regulators. The Company is available to meet its shareholders and their analysts on as and when need basis. Market Price Data High / Low during each month in the last financial year and performance in comparison to broad based index of MSM (service sector). Month Low Price High Price Average Price MSM Index (Service Sector) OMR OMR OMR OMR Jan , Feb , Mar , Apr , May , Jun , Jul , Aug , Sep , Oct , Nov , Dec , Distribution Of Shareholding The Shareholding pattern as on 31 December 2017 is as follows Category of Shareholders Number of Total Share Capital Shareholders Shares % Preference Shareholders (Local) 1 109, Preference Shareholders (Foreign) 1 1,090, Fractions from capital reduction Ordinary Shareholders above 5% 2 234, Ordinary shareholders below 5% but above 1% Ordinary Shareholders below 1% , , TOTAL 909 2,000, ANNUAL REPORT

34 Professional Profile of the Statutory Auditors BDO LLC, the statutory auditors of the Company, has been operating in the Sultanate of Oman for the past 39 years and is one of the leading professional services organizations in the region providing industry focused Assurance, Tax and Advisory Services to enhance value for their clients. The firm is a member firm of BDO International, the fifth largest international accounting organization with over 74,000 employees working in a global network of over 1,400 offices situated in 158 countries. The services of the external auditors were not utilized during the year for any non-audit services listed by the Capital Market Authority that requires the approval of the Audit Committee and needs to be disclosed in this report. The total audit fees for the year ended 31 December 2017 was RO 7,750. Acknowledgement by the Board of Directors The Board of Directors confirms the following: Its responsibility for the preparation of the financial statements in accordance with the applicable standards and rules. Review of the efficiency and adequacy of internal control systems of the Company and that it complies with internal rules and regulations. That there is no material matters that affect the continuation of the Company and its ability to continue its operations during the next financial year. 32 ANNUAL REPORT 2017

35 BRIEF PROFILES OF DIRECTORS ANNEXURE Name Year of Joining 1994 Education Experience Murtadha Ahmed SULTAN Chairman Graduate - Sales and Marketing Management Director of W. J. Towell Group of Companies Well known in the business community, Mr. Sultan has more than 36 years experience in different commercial fields; holding or held various positions in public, private and government organizations. Mr. Murtadha Sultan is also the Chairman of Gulf International Chemicals SAOG. Name Year of Joining Education Experience Bandar ALLAF Vice Chairman 2016 Master Degree in Total Quality Management (TQM), Arab Academy for Science & Technology and Bachelor Degree in Electrical Engineering, King Abdulaziz University. Worked as Senior Director of Business Development with ACWA Power and prior to joining ACWA Power, he was working with Saudi Electricity Company (SEC) for 14 years in the area of Power System Planning, Operation, Control and Technical Services. He is now the CEO of Khaled Juffali Energy and Utilities and he is board member at Haqel Aqaba in Jordan. He was Chairman of Electrical Chapter at Saudi Council of Engineers for 3 years and now Chairman of Renewable Energy Chapter at Saudi Council of Engineers. Mr. Bander is Licensed Professional Engineer (PE) by Saudi Council of Engineers and he published many papers in the area of Electrical Power Systems. Name Grahame FARQUHAR Year of Joining 2016 Education UK FCCA accountant, MBA Strathclyde University, Scotland. Experience Worked in corporate finance roles in UK, Europe, Asia-Pacific (based out of Hong Kong) and USA and for past last seven years spent in the Middle East. Primary roles taken in company financial management, usually as CFO and with responsibilities for merger & acquisitions and consequent business integration. Name Abdullah Mohd AL MA MARI Year of Joining 2016 Education Bachelor Degree in Finance from College of Economics and Political Science in Sultan Qaboos University. Experience Mr. Abdullah Al Ma mari is an Assistant Director of Investment in Ministry of Defence Pension Fund. He has a good experiences in investment, financial analysis and financial Markets. ANNUAL REPORT

36 Name Sami Yahya AL DUGAISHI Year of Joining 2015 Education Master degree of financial Risk Manno probleagement from University of Glasgow - United Kingdom Bachelor degree of finance and banking from Applied Science University - Jordan Experience Mr. Sami Yahya Al Dugaishi has been with the civil service employees pension fund since 1997; he is director of pension benefits department. He is on the Board of Directors at Ubar Hotels & Resorts SAOG and was on the board of directors at Oman Housing Bank SAOG. Name Year of Joining Education Experience Yaseen ABDULLATIF 2009 Bachelor of Arts degree in Business Administration (major Finance) from the American University in December Mr. Abdullatif had worked with the Bank Muscat since March 1987 and he had handled different functions from being branch manager to managing credit assessment and credit controls. In 1998, he was promoted to the position of assistant general manager to handle the Risk Management function of the bank and later on finance function was an added responsibility. Before his retirement (recently), Mr. Abdullatif, as deputy general manager, was responsible for managing support services functions at the bank.. Name Hamad Lal Baksh AL BALUSHI Year of Joining 2009 Education Experience Master of Business Administration (MBA), University of Strathclyde. Mr. Al Balushi is a Financial Professional with over 19 years experience in Corporate Banking, specializing in corporate relationship management, business development, operations, strategic planning and project management. Possess comprehensive understanding of Risk Management, Mergers and Acquisitions, and leveraged asset, and structured finance. Mr. Al Balushi, in 2013 joined Alizz Islamic Bank in the position of Head Large Corporate being responsible for managing corporate banking section at the bank, and he is a member of Management Credit Committee. 34 ANNUAL REPORT 2017

37 BRIEF PROFILE OF MANAGEMENT TEAM Under the terms of the management agreement entered with Power Development Company LLC (PDC) in 1994, PDC provides day to day management of the Company and gives all supports by providing manpower and other infra-structure. For this PDC is paid an annual fee and reimbursement of its expenses. It provides the following: Particulars Omani Non-Omani Total Managers Other staff The management team has been empowered and jointly operates within a well-defined authorization limits set by the Board of Directors. Brief profile of the current managerial team is as follows: Name Zoher KARACHIWALA Year of Joining 1995 Education Chartered Accountant Experience Currently CEO of the Company, Mr. Karachiwala was a CFO until June He also acts as Company Secretary for some of the ENGIE group of companies in Oman. He has 40 years of experience in field of Statutory Audit & Accounting and Finance. He was KPMG Audit Partner in Pakistan before joining United Power Company in Acted as Honorary Chairman of Audit Committee and the Board of Directors for a public company in Oman. Name Guillaume BAUDET Year of Joining 2013 Education Master s Degree in Management and Finance, ISC Paris Business School; Management Program CEDEP/INSEAD, France and University Degree in Business and Administration, Université de Toulon Experience Mr. Baudet has more than 20 years of experience in the fields of finance and general management, acquired in the automotive industry and subsequently in the power and water generation industry. After 11 years spent in the automotive industry in Europe and North America, Mr. Baudet joined GDF SUEZ (now ENGIE) Energy International in 2007 as Head of Business Control for the MENA region and subsequently took up the position of CFO at Hidd Power Company in Bahrain. Guillaume Baudet is the CEO of Sohar Power Company SAOG since Name Sreenath HEBBAR Year of Joining 2009 Education Bachelor of Engineering (Mechanical), VJTI, Mumbai University Experience 32 years of work experience, primarily in Business Development of Engineer Procure Construct (EPC) Contracts in Gas Turbine based Cogeneration & Combined Cycle Power Plants. In his current position as Technical Manager, and Safety Officer, he is responsible for monitoring Contractors compliance to safety norms, technical liaison with the client, statutory authorities, and contractors and provides technical support to the CEO. He has been a member of the Grid Code Review Panel of Oman. ANNUAL REPORT

38 Name Year of Joining 2016 Education Experience Mirdas AL RAWAHI Bachelor of Commerce and Economics from Sultan Qaboos University and has cleared CPA exams from the American Institute of Certified Public Accountants Mr. Mirdas Al Rawahi has 13 years of experience in Finance and accounts. Prior to joining United Power Company, he was the Financial Controller for Takamul Investment Company SAOC. He has also worked in Ernst & Young Muscat office in the fields of External and Internal Audit. Name Salah Al Farsi Year of Joining 1995 Education General Education Diploma Experience Salah Al Farsi was assistant of administration Manager for 23 years. He has experience in administration activity including managing spare parts logistics, liaisons with government organizations, licenses, translation function and supervising local insurance programs. 36 ANNUAL REPORT 2017

39 REPORT OF INDEPENDENT CONSULTANT ON THE PERFORMANCE APPROAISAL OF THE BOARD OF DIRECTORS FOR 2017 ANNUAL REPORT

40 38 ANNUAL REPORT 2017 REPORT OF THE AUDITORS ON CORPORATE GOVERNANCE

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